As a small business operator, you pay personal income taxes and business taxes. There are five types of business taxes: Income Taxes, Self-Employment Taxes, Employment Taxes, Gross Receipts and Excise Taxes. (See chart on federal taxes in Section Five.) The amount and type of taxes you must pay vary according to the type of business entity you select, the amount of gross revenue, and the number of employees. It is very important to factor the payment of taxes into your business planning and financial forecasts. Using an accountant to help determine your tax liability is highly recommended. You can also reference IRS Publication 505, Tax Withholding and Estimated Taxes.

 

 

Federal Corporate Income Tax

Special returns are required for certain organization instead of filing Form 1120 and 1120-A. Please see IRS Instructions for Form 1120 and 1120-A, if you are a Foreign Corporation, Foreign Sales Corporation, Life Insurance Company, Property and Casualty Insurance Company, Political Organization, Real Estate Investment Company, Regulated Investment Company, or Settlement Fund.

 

 

State Corporate Income Tax

Delaware corporate income taxes are computed on the corporation’s federal taxable income, which is apportioned and allocated to Delaware. The tax rate is 8.7 percent. Apportionment of unallocated income is based on a three-factor formula that averages the ratios of 1) Delaware property to total property, 2) Delaware wages to total wages, and 3) Delaware gross receipts to total gross receipts, for those businesses which operate interstate. This formula is applied to a company’s entire taxable income excluding exempt and allocated income.

An "S" corporation is required to make personal income tax payments to Delaware on behalf of the nonresident stockholders. Nonresident stockholders of "S" corporations are treated in the same manner as resident stockholders. Contact the Division of Revenue for more information (302) 577-5800 or visit their web site: www.state.de.us/revenue/.

Updated 4/1/2010 3:03:43 PM | WWen
The Delaware SBDC, a unit of the University of Delaware’s Office of Economic Innovation and Partnerships (OEIP), is funded in part through a cooperative agreement with the U.S. Small Business Administration (SBA) and the State of Delaware. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA or the sponsoring agencies. All programs and services are extended to the public on a nondiscriminatory basis. As equal opportunity/affirmative action employers, the SBA, the University of Delaware and the State of Delaware are all committed to assuring equal opportunity to all persons. The University of Delaware is an equal opportunity/affirmative action employer and Title IX institution. For the University’s complete non-discrimination statement, please visit http://www.udel.edu/home/legal-notices/. - powered by Enfold WordPress Theme

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